Trumpnomics: Sounds about right this analysis

Possibility of stagflation. Short-term gain for long-term pain? That’s the view of economists at Goldman Sachs, who argue that Mr. Trump’s policies would offset any positive impacts over the long-run. – Bloomberg

NYT Dealbook

And no leh, Jeff, markets are not easily seduced. They are worse than hookers. They’ll change their opinions and analyses to vindicate the victor.

By Amie Tsang

Stock markets are easily rattled and they don’t like uncertainty. But they have been on the up since election results came in, so does that mean we are in for more of the same this week and in the long term?

We don’t know. But, Jeff Sommer says, it does mean that markets are easily seduced. The uncertainty around how Donald J. Trump could mean that the bar was set low for him — and the appearance of normality is enough to keep bears at bay. The Republican sweep of Congress also makes it less likely that there will be gridlock in Washington.

And then there are the campaign promises that could promote growth and corporate profits. (Some of them could do the opposite, too.)

Even if we knew how all of them were going to be enforced, it would be hard to know exactly what the result would be.

And markets have historically been bad at pricing in hard-to-predict seismic events. So what do we do?

“After so much inaccurate prognostication about what the near-term market effects of a Trump victory would be, having some modesty about our ability to predict how his policies will play out in the years ahead is very much in order,” Neil Irwin writes.

While this plays out, here are some of the battlegrounds that lie ahead.

Tax Cuts

Republicans want tax cuts and the president-elect wants tax cuts. But they don’t always want quite the same ones.

Mr. Trump has said he was determined to get multinational companies to pay their American tax bills every year. The sting would not be as great if he also cut corporate rates and allowed credits for foreign taxes paid.

House Republicans have been pushing for a territorial system, in which businesses are taxed solely on goods and services sold in the United States. But that encourages businesses to shop around for lower tax rates, ultimately shifting profits and jobs overseas — not ideal for a president who wants more jobs in the United States.

Mr. Trump is expected to insist on a deduction for interest paid on debt-financed projects, a provision dear to real estate developers. But otherwise, he may keep his ideas broad, leaving Congress to pin down the details.

The Federal Reserve

Mr. Trump has embraced criticism that the Federal Reserve is creating more problems than it is solving, and his advisers would like to rein in the institution. Mr. Trump could overhaul its leadership, filling a majority of the Fed’s seven-seat board with his nominees over the next 18 months, even replacing Janet L. Yellen, the chairwoman, in February 2018.

Fed officials have opposed increased congressional oversight, saying that would infringe on the central bank’s operational independence, and they are now facing the possibility of a harder push for changes from emboldened Republicans.